Forest Products Cluster Development 

in Central Arizona—Implications for 

Landscape-Scale Forest Restoration

David Nicholls

United States Department of Agriculture

Forest 

Service

Pacific Northwest 

Research Station

General Technical Report

PNW-GTR-898

August

2014
Authors

David Nicholls is a forest products technologist, Alaska Wood Utilization and 

Development Center, 204 Siginaka Way, Sitka, AK 99835.

Cover photographs: Apache-Sitgreaves National Forest, Arizona; logging 

operation; log deck after harvest.

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Abstract

Nicholls, David. 2014. Forest products cluster development in central Arizona—

implications for landscape-scale forest restoration. Gen. Tech. Rep. PNWGTR-898. Portland, OR: U.S. Department of Agriculture, Forest Service, Pacific 

Northwest Research Station. 18 p.

Since 2004, close to 50,000 ac of hazardous fuels have been mechanically treated 

in east-central Arizona as part of the USDA Forest Service’s first 10-year stewardship project on national forest lands. The need for coordinated wood products 

and biomass utilization in Arizona is likely to increase as broad-scale restoration 

treatments across Arizona’s national forests remove large amounts of wood fiber in 

coming decades. This research considers biomass availability and land ownership 

patterns for three potential wood products cluster sites in the Mogollon Rim region 

of Arizona (Show Low, Flagstaff, and Heber-Overgaard, Arizona). The formation 

of one or more wood products clusters in the Mogollon Rim region could create tangible benefits for communities in central Arizona as new businesses utilize increasing volumes of wood fiber. Land ownership patterns varied greatly between the 

locations, with federal lands predominating near Flagstaff and private ownership 

more common near Show Low. Regardless of the path forward, community support 

for forest restoration initiatives is likely to be a key to success, as is a shared vision 

held by stakeholders.

Keywords: Forest restoration, wood products, clusters, bioenergy, ponderosa 

pine, Arizona. 
Contents

1 Introduction

3 Objectives and Methods

4 Discussion

4 Creation of New Forest Products Business Clusters

6 Role of Solid Wood Industry in Shaping Success 

9 Bioenergy Applications for Whole-Tree Chips

9 Forest Land Ownership

10 Local Employment

11 Biomass Transportation Distances and Harvesting Costs

11 Valuing Ecosystem Services

12 The Four Forest Restoration Initiative

13 Conclusions

14 Metric Equivalents

15 Literature Cited
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Forest Products Cluster Development in Central Arizona—Implications for Landscape-Scale Forest Restoration

Introduction

The softwood forests of central Arizona are part of a unique ecosystem that includes 

the largest contiguous ponderosa pine (Pinus ponderosa Dougl. ex Laws.) forest 

in North America (Neary and Zieroth 2007). However, the 2002 Rodeo-Chediski 

Fire altered this ecosystem by burning nearly 435,000 ac of forest, forcing evacuation of more than 30,000 local residents and destroying close to 500 homes. The 

White Mountain Stewardship Project (WMSP) in the Apache-Sitgreaves National 

Forest was established shortly thereafter, becoming the first 10-year stewardship 

contract in the National Forest System. In its first 5 years, the WMSP has provided 

many community benefits to Arizona’s White Mountain region, including increased 

employment, small business development, enhanced recreational opportunities, 

improved wildlife habitat, and reduced wildfire risk (Sitko and Hurteau 2010). More 

than 49,000 ac have been treated or have treatments in progress, and 96 percent of 

this harvesting is of stems less than 12 inches in diameter (table 1). The WMSP is 

expected to cost the Forest Service an average of $6 million per year ($60 million 

over 10 years) which, although costly, is estimated to be only 25 percent of the financial burden of the Rodeo-Chediski Fire (Neary and Zieroth 2007). Forest Service 

expenditures during the first 5 years of the WMSP have led to a $40 million benefit 

in local investments, expenditures, and tax revenues (Sitko and Hurteau 2010). 

Despite encouraging signs of growth and diversification in the wood products 

industry (in particular the wood pellet mill in Show Low), it remains to be seen 

whether the aggregate forest products industry can develop enough “critical mass” 

to use this small-diameter resource effectively. One obstacle is the high cost of 

harvesting and transportation. Pan et al. (2008) evaluated four fuel-reduction thinning treatment units in Arizona and found that when thinning stands from below 

Table 1—Fiber classes and general uses for wood harvested from the White Mountain 

Stewardship Project, Arizona, 2004–2009 

Stem diameter Percentage

Fiber class/dimension class General uses of total

Inches

Merchantable nonsawtimber 5 to 8.9 Electrical generation, pellets, pallets, 30

 logs or roundwood other small-dimension wood products

Merchantable stemwood 9 to 11.9 Electrical generation, pellets, pallets, 25

 other small-dimension wood products

Merchantable stemwood > 12 Dimensional lumber, pellets, pallets, 4

 other wood products

Residue from all above < 4.9 Electrical generation 41

 merchantable and pulpwood

Source: Sitko and Hurteau 2010.
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GENERAL TECHNICAL REPORT PNW-GTR-898

(and harvesting trees 5 inches in diameter and smaller), harvesting and transportation costs averaged $55.27 per bone-dry ton for distances up to 36 mi. This is likely 

greater than the market value of raw material for most forest industries in Arizona. 

In Arizona’s White Mountain region, with arid nonforested regions to the north 

and south, economical transportation distances can be difficult to evaluate for 

potential biomass users located “on the edge of the forest and the edge of the desert.” 

For example, the Snowflake Energy Facility (in Snowflake, Arizona) is within the 

pinyon-juniper region, and the Cholla Coal Facility (in Holbrook, Arizona) is even 

farther from forested areas; however, both of these facilities are either current or 

potential users of biomass harvested from the WMSP. The importance of transportation costs is underscored by the finding that average transportation costs represented 

more than 47 percent of total production costs for small-diameter stems (Pan et al. 

2008). Economic restoration treatments are proving challenging because recent 

harvest costs in Arizona for mechanical thinning treatments yielding 600 to 1,200 

ft3 per acre have been estimated between $557 and $836 per acre (Selig et al. 2010).

The cost challenges of harvesting and transporting biomass notwithstanding, 

a nascent wood products cluster is beginning to take hold in the White Mountains 

region of Arizona. From 2005 to 2008, between 13 and 15 known wood products 

firms purchased wood fiber from WMSP activities (table 2), indicating an ongoing 

demand to produce a variety of product types. However, a cornerstone of many 

successful wood products clusters, a production sawmill, has been conspicuously 

absent from this part of Arizona since the recent closure of a lumber mill in the 

White Mountains region (WMAT 2011). However, two other sawmills, both 

located in the northern White Mountains area, could potentially become leaders 

(or co-leaders) of a future wood products cluster, filling the void left by previous 

mill closures.

Larson and Mirth (2001) found that a simulated 16-in diameter cap on harvests within a 332-ac site near Flagstaff, Arizona, resulted in implementation cost 

increases of up to 19.4 percent and wood volume reductions of up to 39 percent. 

Thus, wood products clusters could be a key to economic use of WMSP materials. 

However, production of a broad mix of wood products—an important element of 

wood products cluster development—remains unclear. The lack of dry kiln capacity in Arizona could also hinder development of an integrated value-added wood 

products cluster.

Future restoration activities on broader scales in Arizona could favor a more 

diverse mix of wood products. The Four Forest Restoration Initiative (“4FRI”) is 

a collaborative effort to treat up to 1 million acres over the next 20 years in four 

Arizona national forests (4FRI 2011). This volume of biomass and solid wood could 

create new opportunities for existing manufacturers, with the potential to create 
3

Forest Products Cluster Development in Central Arizona—Implications for Landscape-Scale Forest Restoration

new industries. This is significant in that large-scale 4FRI-type restoration treatments could help expand regional wood production by up to 88 percent (Hampton 

et al. 2011). 

Objectives and Methods

Research objectives for this report are to (1) review the broad range of forest activities centered around biomass utilization in central Arizona, and (2) evaluate key 

issues needed for a forest industry cluster to become self-sustaining. This report 

addresses some of the broader issues surrounding the formation of a wood products 

cluster. It starts with a discussion of cluster theory, followed by region-specific 

factors including biomass transportation, employment, and land ownership. This 

overview provides a framework for cluster potential in Arizona, and in doing so, 

links current and future forest restoration activities.

Table 2—Businesses purchasing wood material from Future Forest, LLC, directly 

tied to the White Mountain Stewardship Project, 2005–2008

Business Location 2005 2006 2007 2008

APC Pallets Phoenix X

APC Lumber Eagar X

Arizona Log and Timberworks Eagar X X X X

Cooley Forest Products Snowflake X

Forest Energy Corp. Show Low X X X X

Future Forest Pinetop X X X X

Mountain Top Wood Products Snowflake X X

Moulding Accents Snowflake X X

Nutrioso Logging Nutrioso X X X

Reidhead Bros. Lumber Nutrioso X X X X

Reidhead Bros. Remanufacturing Plant Springerville X X X

Snowflake White Mountain Power Snowflake X X X X

Round Valley Wholesale Lumber Eagar X X X X

Snowflake Lumber Moulding Snowflake X X X

Southwest Forest Products, Inc. Phoenix X 

TriStar Logging, Inc. Snowflake X X X X

WB Contracting Eagar X X X X

Western Moulding Snowflake X

Western Renewable Energy Eagar X X 

Winner’s Circle Soils, Inc. Taylor X X X

 Total number of businesses 13 15 15 13

Source: Sitko and Hurteau 2010. 
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GENERAL TECHNICAL REPORT PNW-GTR-898

Discussion

The White Mountain Stewardship Project has been a notable success during its first 

5 years, providing an array of biomass and solid wood products to local markets 

(table 2). During this period, 35,166 ac have been treated, with an additional 14,553 

ac in treatment progress (Sitka and Hurteau 2010). Much of this biomass is being 

used for pellet manufacturing to supply residential heating systems. However, this 

success has been fostered by a subsidy, estimated to be more than $300 per acre 

(Selig et al. 2010). As the first 5-year period of the WMSP was drawing to a close, 

a major wildfire (the Wallow Fire) burned more than 520,000 ac in east-central 

Arizona and western New Mexico, adding uncertainty to the planned use of this 

material in future restoration activities. The following topical review considers 

current issues for the White Mountain Stewardship Project. A goal of this discussion is to identify relevant factors from the WMSP that could provide context for 

future wood products cluster development, as part of the 4FRI project or other 

Arizona initiatives. 

Creation of New Forest Products Business Clusters

A considerable literature over the past several decades has described business 

industry cluster development; however, relatively few efforts have focused on wood 

products clusters. Clusters can generally be defined as regional agglomerations 

of companies, research institutions, government agencies, and others in a specific 

area of business activity related through various knowledge and economic linkages 

(Porter 1998). Clusters can also be thought of as critical masses of competitive 

success, linked together geographically and functionally. Others have defined 

clusters as “groups of establishments located within close geographic proximity of 

one another, which either share a common set of input needs, or rely on each other 

as supplier or customer” (Gibbs and Bernat 1997). A good example of this in the 

wood products industry is a sawmill (the supplier) that provides residue material to 

a pellet mill or bioenergy facility (the customer). In general, business clusters are 

geographic concentrations of companies that provide mutual advantages for their 

participants. 

Rural industry clusters have the potential to create higher wages for workers 

compared to employment outside of clusters. Gibbs and Bernat (1997) found that 

the wage premium for workers in rural clusters (versus rural workers employed 

outside of clusters) was as high as 11 to 13 percent. When just the lumber and 

wood industry groups are considered, the wage premium for rural workers was 7.4 

percent. This feature could benefit economic development of wood products clusters 

in rural Arizona by helping to attract qualified workers.
5

Forest Products Cluster Development in Central Arizona—Implications for Landscape-Scale Forest Restoration

In east-central Arizona, a natural delineation for a wood products cluster region 

would be the ponderosa pine forests extending roughly from Nutrioso in the east to 

Williams in the west (fig. 1). Porter (2000) indicated that the boundaries of clusters 

can evolve as new firms emerge and established businesses decline. Technological 

developments, market conditions, and regulatory changes can also contribute to 

shifting cluster boundaries. Many of the communities along the Mogollon Rim are 

either located near national forests or in some cases embedded within federal lands. 

Cluster theory can be used to provide a framework for examining the microeconomic relationships between national forests and associated communities. Nationalforest-based clusters have the potential not only to help provide multiple uses of 

Figure 1—Map of Arizona with the Mogollon Rim region circled.
6

GENERAL TECHNICAL REPORT PNW-GTR-898

national forest lands, but also to diversify microeconomic environments and private 

sector policies (Rojas 2007).

Ready access to transportation corridors (including Interstate 40 and Interstate 

17 in Arizona, and railheads) would be important for wood products clusters to 

reach regional markets while also providing access to support services and suppliers. Hagadone and Grala (2012) used spatial analysis techniques to find that the 

presence of railways had a significant positive impact on the number of secondary 

wood products manufacturers in a cluster. These transportation benefits are already 

seen in pellet production in Show Low, Arizona, where packaged wood pellets for 

residential heating are shipped throughout the Southwestern United States. Two 

logical locations for wood products clusters along the Mogollon Rim would be the 

greater Flagstaff area (west side), and Show Low/White Mountains area (east side). 

An intermediate location in Heber-Overgaard would be centrally located, but in a 

smaller community located farther from transportation corridors. 

Proximity to population centers has been found important for wood products 

clusters. Aguilar and Vlosky (2006) found that population significantly influences 

the presence of secondary wood products industries in Louisiana and that primary 

manufacturers are more spatially dependent than secondary producers. In Arizona, there are few population centers within the forested regions in the northern 

and eastern parts of the state. Although higher value secondary products could 

potentially be produced by Phoenix-based firms (table 2), it is unlikely that enough 

critical mass could form there to create an effective wood products cluster.

Wood products clusters can sometimes be characterized by small firms. For 

example, a cluster of Amish furniture manufacturers in Ohio had a median of 4.0 

employees in 2005 (Bumgardner et al. 2008). This is relevant for Arizona’s wood 

products industry, which currently has few large producers. Important to the success of a wood products cluster in Arizona would be the diversity of firm sizes and 

product types, to ensure that woody material is being fully utilized

Role of Solid Wood Industry in Shaping Success 

A significant challenge in the White Mountains region is the lack of a production 

sawmill or other high-volume wood products producer that could help provide 

critical mass needed to stimulate smaller niche producers, who alone might not be 

able to secure raw materials at a reasonable cost. A sawmill in Whiteriver, Arizona, 

operated by the White Mountain Apache Tribe, has stopped production within 

the past few years, leaving a gap in this part of the wood products infrastructure 

(WMAT 2011). Given that the price of fuel can greatly affect the viability of 

sawmills, the trend in Arizona’s White Mountains has been for smaller sawmills to 
7

Forest Products Cluster Development in Central Arizona—Implications for Landscape-Scale Forest Restoration

become established, taking advantage of shorter average transportation distances 

(versus larger mills having greater transportation distances).1 

During cluster formation, a specific industry group typically takes a lead role, 

defining products and coordinating the relationship-building process (Colgan and 

Baker 2003). Without the presence of a large sawmill in central Arizona, this cluster leadership could be provided by a bioenergy producer (either pellet production 

or energy generation), several intermediate-sized sawmills, or perhaps a new wood 

products enterprise. 

A successful cluster would likely include diverse members, serving niche 

markets while also providing synergy in terms of raw material flows and shared 

resources (table 3). Cluster environments often lead to greater innovation and a 

greater flow of ideas (Ketels 2009). Further, cluster development can be greatly 

influenced by government policy. This is important for potential wood products 

clusters in Arizona owing to the diversity of products possible from restoration 

thinning, much of which would take place on Forest Service land. Improvements 

in cluster productivity often occur only when multiple parts of the supply chain 

improve simultaneously (e.g., logging operations and sawmilling) (Porter 1998). 

In northern Arizona, a sudden influx of woody biomass could necessitate similar 

improvements in different parts of the cluster, including harvesting, primary and 

secondary processing, biomass utilization, and processing of small-diameter stems 

into lumber.

Lowell and Green (2001) found that small-diameter ponderosa pine could have 

enough value for lumber and potentially moulding and millwork production. However, wood product and processing options should be chosen carefully by startup 

1

 Rappold, P. 2013. Personal communication. Wood utilization and marketing specialist,

Arizona State Forestry Division, 3650 Lake Mary Road, Flagstaff, AZ 86001.

Table 3—Flow of wood from specific harvesting 

contractors, Apache-Sitgreaves National Forest, Arizona 

(2006)

Number of contractors Green tons Product

2 95,900 Pellets

2 23,800 Lumber

3 20,900 Biomass

2 6,200 Posts and poles

2 7,400 Lumber

11 154,200

Source: Hampton et al. 2008.
8

GENERAL TECHNICAL REPORT PNW-GTR-898

firms. Fight et al. (2004) evaluated small-diameter processing options in the eastern 

White Mountains region of Arizona, finding that machine-processed utility poles 

were not a viable product option because of high equipment costs, while hand-peeled 

poles were more economically attractive. Despite this research finding, at least one 

regional firm does have a pole-peeling operation, taking advantage of the generally 

favorable tree forms found in the eastern White Mountains (see footnote 1).

As of 2002, there were 23 primary processing facilities in Arizona (Morgan 

et al 2006); by 2007 this had dropped to 17 (Hayes et al. 2012) (table 4). Lumber 

production from sawmills could play an important role in the success of future restoration initiatives such as the 4FRI collaborative. Simulation studies near Flagstaff, 

Arizona, found that when some 16- to 21-in stems were harvested, the effect was 

lower operating costs, higher financial net returns, and increases in harvested fiber 

(versus harvesting only smaller stems) (Larson and Mirth 2001). Similarly, Lowell 

and Green (2001) found that project economics could be improved when some 

larger stems were included, especially for appearance lumber grades. 

Other research on Western forests studies found that removal of some larger 

stems can improve stand structure and fire resilience (Hollenstein et al. 2001). 

Diameter caps could also have negative impacts on ecosystem factors, including 

forest canopy openings, understory functioning, streamflow, and fire behavior 

(Abella et al. 2006). The issue of removing larger stems (greater than 16 inches in 

diameter) that could support a viable sawmill industry is potentially a very controversial issue that, despite likely economic benefits, could reduce the level of broadbased consensus needed for large-scale restoration projects.

Table 4—Primary wood products facilities in Arizona, by product (2007)

Log homes Other Pulp

Year Lumber and house logs productsa and paper Total

2007 8 5 4 0 17

2002 11 5 7 0 23

1998 6 4 2 1 13

1990 14 3 1 1 19

1984 20 0 2 1 23

a

 Other products include posts, poles, vigas, latillas, fuel pellets, log furniture, and biomass energy.

Sources: Hayes et al. 2012, Keegan et al. 2001, McLain 1988, Morgan et al. 2006. 
9

Forest Products Cluster Development in Central Arizona—Implications for Landscape-Scale Forest Restoration

Bioenergy Applications for Whole-Tree Chips

A successful market for WMSP biomass over the past 5 years has been clean, barkfree chips for pellet production. The pellet mill in Show Low, Arizona, is currently 

producing about 60,000 tons of wood pellets per year, mostly for the residential 

heating market. “Green” pellets (containing wood, bark, and foliage) could be 

produced to supplement the clean (debarked) pellets currently used at the Show 

Low plant. Whole tree chipping could also result in greater in-woods production, 

because bark, limbs, and needles would be utilized (vs. left on site). A good example of this market has been the Snowflake Power facility. This biomass plant, which 

began operations in 2008 and closed in March 2013, had been scheduled to reopen 

in late 2013, once again enhancing markets for WMSP biomass (Worth 2013).

However, questions remain regarding use of whole trees for pellets. For 

example, how would needles, bark, and dirt content influence fuel quality for the 

different intended uses? Could an industrial grade pellet be produced from wholetree chips that could find widespread utility in central Arizona markets? 

Forest Land Ownership

Land ownership on public and private lands within a 30-mi radius from a potential 

cluster site was evaluated using customized USDA Forest Service Forest Inventory 

and Analysis (FIA) data retrievals (USDA FS 2011). Forest Service ownership, 

other federal ownership, state and local government, and private landowners were 

considered. Land ownership patterns vary greatly between the three potential 

cluster sites. Private ownership predominates near Show Low, whereas Flagstaff 

is closer to large areas of Forest Service land (fig. 2). Despite this trend, high land 

prices have had a limiting effect of development of the sawmill industry in certain 

Arizona markets (including the Flagstaff/Williams, Arizona area) (see footnote 1).

Forest restoration treatments on federal lands are subject to environmental 

reviews and legal appeals, leading to potentially expensive and time-consuming 

delays. In other areas, federal lands are intermixed with private properties in a 

mosaic pattern, for example near Lakeside, Arizona. Here, stewardship activities on 

federal lands can have a direct impact on private lands (and vice versa).

Near Show Low, Arizona, land ownership is also characterized by multiple 

owners. For example, in much of the White Mountains region of Arizona, the 

Apache-Sitgreaves National Forest, a thin strip of land (typically less than 10 mi 

wide) is bordered on the south by the White Mountain Apache Reservation and 

on the north by private or nonforested land. Any wood users in this region would 

likely draw upon multiple land ownerships for their raw material supply. It should 
10

GENERAL TECHNICAL REPORT PNW-GTR-898

be noted that the communitites of Eagar, Springerville, and Nutrioso, on the eastern 

edge of Arizona’s White Mountains, were severely affected by the Wallow Fire (in 

June 2011), and could potentially yield large volumes of fire-salvaged timber.

Local Employment

An estimated, 319 jobs have stemmed directly from WMSP work, and more than 

$13 million annually is spent by businesses purchasing wood fiber and by related 

contractor operations (Sitko and Hurteau 2010). It is estimated that additional 

mechanical thinning activities on 30,000 ac per year as part of the 4FRI initiative 

could support up to 600 private sector jobs in Arizona (Hjerpe and Gunderson 

2007). On a broader scale, Hjerpe and Kim (2008) attributed the creation of 500 

jobs to fuel reduction programs in five national forests in the Southwest Region of 

the Forest Service (fiscal year 2005).

The presence of one or more large producers could have an important influence 

on the dynamics of biomass supply, cluster formation, employment, and other economic factors. Larger wood products facilities have the potential to pay a premium 

for smaller diameter material, reducing the financial burden on national forests to 

pay for restoration treatments (Abrams and Burns 2007).

0

200,000

400,000

600,000

800,000

1,000,000

1,200,000

1,400,000

Forest Service (and

other federal ownership

Private State and local

government

Show Low

Heber-Overgaard

Flagstaff

Acres

Figure 2—Land ownership near three potential wood products cluster sites in Arizona (number of acres 

within 30-m radius from community center). 
11

Forest Products Cluster Development in Central Arizona—Implications for Landscape-Scale Forest Restoration

Biomass Transportation Distances and Harvesting Costs

For the Southwestern United States, Hjerpe et al. (2009) estimated restoration 

costs to range from $300 to $700 per acre. This is in line with harvesting costs in 

northern Arizona, estimated to range from $557 to $836 per acre, excluding transportation costs (Selig et al. 2010). However, in the White Mountains of the ApacheSitgreaves National Forest, harvest costs from restoration treatments have been 

higher, generally ranging between $1,100 and $1,300 per acre (Selig et al. 2010).

Factors such as slope, transportation distance, trees per acre, and stem diameter 

can have a bearing on total costs. For example, mechanized sawlog-only harvesting 

options in Western states have been shown to be cost effective for hauling distances 

up to 53 mi (Han et al. 2004). Yet, for smaller stems less than 5 inches in diameter, 

harvesting and transportation in Arizona averaged about $55 per bone-dry ton for 

short transportation distances of 36 mi or less (Pan et al. 2008). Here, transportation costs represented more than 47 percent of total costs. Because harvest costs 

are often borne by larger diameter sawlogs, the smaller diameter stems can be 

considered “free” except for the costs of transporting them from the forest landing 

to a final destination. However, because many of the utilization sites are located “on 

the edge of the desert” they could require transportation distances greater than 36 

mi, increasing the likelihood that delivered wood fuel prices would exceed current 

market values.

Biomass transportation costs could vary considerably between the three cluster 

locations that were evaluated. Becker et al. (2009), using financial harvesting cost 

models, found that co-locating processing facilities to minimize transportation 

distances was the single most important cost-reduction strategy. When considering 

Arizona wood products clusters, there were considerable differences in biomass 

availability between sites.

Valuing Ecosystem Services

Numerous ecosystem service benefits have also been realized from restoration 

treatments, including forest health improvements and landscape level increases in 

vegetation structural diversity (Sitko and Hurteau 2010). Carbon benefits have also 

been recognized by Hurteau et al. (2008), who found that, when considering standreplacing fires, prior thinning treatments could reduce carbon dioxide (CO2) release 

by as much as 98 percent (versus a scenario of catastrophic fires). Forest thinning 

can also influence the connectivity of forest “patches” needed to ensure suitable 

wildlife habitat (Sitko and Hurteau 2010). The northern goshawk (Accipiter gentilis), Merriam’s wild turkey (Meleagris gallopavo merriami), and red-faced warbler 

(Cardellina rubrifrons) all depend on habitat connectivity. 
12

GENERAL TECHNICAL REPORT PNW-GTR-898

Benefits for forest health, biodiversity, wildlife habitat, carbon sequestration, 

and water quality are possible, yet their economic benefits are difficult to quantify. 

For example, North and Hurteau (2011) found that significant carbon benefits can be 

attained when fuels treatments are used to reduce carbon stock losses in the event 

of a high-severity wildfire. In Southwestern ponderosa pine forests, ecosystem 

health can be improved by reducing ladder fuels, protecting large trees, and increasing overall biodiversity levels (Allen et al. 2002). 

Thus, management activities designed to benefit one or more ecosystem services can result in tradeoffs among other ecosystem services, including wood production. Of particular interest moving forward with the WMSP will be the desire 

to reduce fire risk while also providing ecosystem services and economic benefits 

for area residents and visitors. For example, Snider et al. (2003) found that it would 

be cost effective to spend up to $505 per acre for restoration to prevent catastrophic 

fires in Southwestern forests. However, this estimate did not include ecosystem 

service benefits associated with water, recreation, wildlife, and scenic values—

benefits that would be impaired after a catastrophic fire. Several Southwestern 

U.S. municipalities have taken a proactive approach toward minimizing the loss of 

wildfire-related ecosystem services (namely water quality). The City of Flagstaff, 

Arizona, has passed a $10 million referendum to treat forests within its watershed. 

Likewise, Santa Fe, New Mexico, has adopted a “watershed tax” to offset the cost 

of thinning operations in its watershed (see footnote 1).

The formation of a successful wood products cluster in central Arizona, and its 

resulting economic benefits, will be inextricably linked to the suite of ecosystem 

services needed for long-term forest management objectives. A sustainable wood 

products cluster is one that could work in equilibrium with a sustainable ecosystem 

services regime to arrive at the tradeoffs that would best serve the interests of both. 

The Four Forest Restoration Initiative

The Four Forest Restoration Initiative is a collaborative effort to treat portions 

of four of Arizona’s national forests (the Apache-Sitgreaves, Coconino, Kaibab, 

and Tonto National Forests) under one initiative. This effort, started in 2010, has 

included more than a dozen public meetings at various Mogollon Rim locations. 

A memorandum of understanding between the Forest Service and 24 stakeholder 

representatives was signed in February 2011. Plans to treat up to 2.4 million ac 

of forest using stewardship contracts on these four national forests would likely 

include a wide range of forest types over a large geographic area. The 4FRI has an 

objective of reducing the agency costs to close to zero (Wilent 2010). 
13

Forest Products Cluster Development in Central Arizona—Implications for Landscape-Scale Forest Restoration

Under the 4FRI, integrated landscape-level treatments are planned across the 

Mogollon Rim to reduce fire risk while also providing for sustainable forest industries and delivering other ecosystem service benefits. The 4FRI hopes to mechanically thin up to 50,000 ac of forest land per year over a 20-year period (for a total of 

up to 1 million ac). Up to 850 million ft3 of stem volume and 8 million green tons of 

tree crown biomass could potentially be generated from this initiative (Hampton et 

al. 2011). Much of this material (43 percent of the total) is in the 5- to 16-in diameter 

class. Central to the 4FRI planning are the implementation costs, and the desire that 

treatments require only minimal federal subsidies. Total administrative costs have 

been estimated to be close to $360 per acre, including planning, preparation, and 

harvest administration costs (Selig et al. 2010). Although these costs are in line with 

comparable costs for the WMSP, estimated to be about $300 per acre (Sitko and 

Hurteau 2010), others (Bright 2008) have identified methods to reduce these costs 

to about $175 per acre. Beyond these administrative costs, site-specific factors such 

as harvest methods, topography, and hauling distances can have a strong bearing 

on costs. 

Community support for forest restoration initiatives has proven to be a key 

to success. For example, there has been broad-based community support for the 

WMSP project, as indicated by a survey of more than 700 households, which found 

that 94 percent supported mechanical treatment of forests to reduce fire risk (Sitko 

and Hurteau 2010). The Prescott Area Wildland/Urban Interface Commission and 

the Greater Flagstaff Forest Partnership are two examples of collaborative community organizations with a focus on forest ecosystem restoration. Among the roles that 

community groups can play include assisting hazard fuel removals, promoting local 

markets for wood products, and providing community fire safety education (Iversen 

and Van Demark 2006). A total of six community wildfire protection plans have 

been developed by local governments within the 4FRI treatment area in Arizona 

(Anon. 2010), a further indication of community support. To date, there have been 

more than 14 public planning meetings as part of the 4FRI initiative (4FRI 2011). A 

unique feature of the 4FRI effort has been the high level of collaboration between 

environmental and conservation groups, the Forest Service, and industrial partners.

Conclusions

Forest restoration harvests in central Arizona have yielded important economic and 

ecological benefits thus far during the WMSP, and are likely to continue as larger 

scale efforts are planned. The formation of one or more wood products clusters in 

the Mogollon Rim region could create tangible benefits for communities in central 
14

GENERAL TECHNICAL REPORT PNW-GTR-898

Arizona as new businesses use increasing volumes of wood fiber. However, cluster 

development will not occur overnight. A sudden influx of wood from planned largescale restorations could create growing pains for wood products businesses; the best 

use for material of diverse harvest locations, species, diameter classes, and wood 

quality would likely be determined during an adaptive, market-driven process. Key 

issues include timber availability, commercial land availability, and support from 

government in the form of incentive programs and renewable energy standards, 

among other policy measures.

Moreover, careful establishment of the most viable wood-based industries 

through market-driven processes will be important, because subtle differences in 

products and processing options can result in large differences in economic feasibility. Successful cluster development is often aided by leadership from one or more 

established firms, and there are several businesses in central Arizona that could 

serve this role. However, just as important is broad-based community support and 

collaboration in all phases of planning. Because the need to improve forest health 

will drive restoration activities and ultimately wood utilization opportunities, it will 

be important that any new industry be appropriately scaled and that stakeholders 

reach consensus across large areas (Hampton et al. 2011). Finally, land ownership 

patterns, which varied considerably between the three potential locations, will 

influence wood availability, treatment procedures, and the regulatory environment 

in which cluster formation can occur.

Metric Equivalents

When you know: Multiply by: To find:

Inches (in) 2.540 Centimeters (cm) 

Miles (mi) 1.609 Kilometers

Acres (ac) 0.4047 Hectares (ha)

Cubic feet (ft3

) 0.0283 Cubic meters (m3)

Tons .454 Kilograms
15

Forest Products Cluster Development in Central Arizona—Implications for Landscape-Scale Forest Restoration

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